7 things to think about before paying off your mortgage early

Thinking of Paying Off Your Mortgage Early? There are Some Questions You Should Ask Yourself First

So, you’ve almost reached the promised land and you’ve got yourself in the position where you can go mortgage free if you choose to. It’s a very tempting thing to do, as the prospect of having no more mortgage payments to find is certainly an appealing one. However, before you take the plunge and pay off what remains of your mortgage, you should take a moment to think about whether it is actually the best thing for you to do, financially speaking.

Of course, we’re not talking about just those with residential mortgages but also mortgages on buy to let properties. The financial sense of paying your mortgage off early will vary, depending on your own personal and business circumstances, so it’s something you really do need to give some serious thought to.

In this blog, we take a look at some of the questions you should be asking yourself, should you find yourself facing this scenario. We have attempted to come up with, what we think, is a pretty definitive list.

Question 1 – How are interest rates behaving?

The current and projected mortgage interest rates for the coming year are a big indicator as to the savviest course of action. This applies primarily to those in the buy to let market, as there are currently some tremendous fixed rate mortgages available. The Bank of England recently had to raise rates for just the second time in the last decade, so there’s no guarantee that these rates are going to be around forever. The money you’re releasing by paying off your mortgage early, could in some cases, be made to work harder for you by reinvesting it.

Question 2 – Could inflation help?

What £200k buys you now, won’t get you the same in 20 years time, so relatively speaking, the longer into the future you go, the less the amount you pay will seem. Using that rationale, the money you have now will feel like less in the future and so, easier to pay down. This is offset by the mortgage payments you’d have to pay in the meantime, but if it’s a rented property, the income it provides will usually cover it.

Question 3 – Does your mortgage allow for it?

What can be a real deal breaker is whether your mortgage allows you to pay early or not. If you don’t have a pre-existing agreement to pay your mortgage early, there may be penalty incurred by doing so. Often you’ll find that a maximum of 10% of the loan amount can be repaid within a fixed period, however, it is just as likely that you don’t have any restrictions, especially if you’ve had a mortgage for a long time already. It’s just best to check before you do anything.

Question 4 – Could the money be better invested somewhere else?

Should the cost of finance remain low, then leveraging money tied up in your property against other investment opportunities that offer a better return could be a consideration. If you’re someone who views owning property as a career, rather than as a consequence of needing somewhere to live, then the cost of borrowing is going be something that you’re focused on, so as to maximise your earnings.

Question 5 – Is the reason for paying it off a sound one?

Paying off your mortgage early is something that all homeowners aspire to, but occasionally the motives for doing don’t bear up to close scrutiny. For example, a commonly held belief by parents is that paying off the mortgage protects their children, should the worst happen. However, many of us have life insurance policies that cover that kind of thing already, also able to pay off our mortgages when we die.

We’re not saying that paying off your mortgage early isn’t a good thing, but it might not be the most prudent one if your personal circumstances aren’t well catered for by your decision. Try not to get too focused on the “paying off the mortgage” carrot, which can cloud your judgement.

Maybe you have come into some money and are wondering if it’s the best thing to do for you and your family.

Question 6 – How close are you to retirement?

When you are in the prime of life, then investing funds into different assets can provide more in terms of returns than paying off existing loans, but when you are approaching retirement age, the fact that you are likely to stop working soon is something you’re going to have to factor into your calculations. The older you get, the less you want to have in the way of liabilities, which makes paying things off a much more attractive proposition.

Question 7 – How fluid do you need your capital?

When you’re at a crossroads and having to decide whether to reinvest or pay off your mortgage, it’s important to consider whether you have sufficient contingencies in place in case of ill health, job loss or rainy day situation. Often, paying up to the maximum allowable represents a good half way house between reinvestment and completely repaying your mortgage, as being ahead of your official payment schedule provides an opportunity for a self-imposed payment holiday, should your situation demand it.

In Summary

If this blog achieves one thing and one thing only, we hope it’s that it made you stop and think before you committed to paying off your mortgage. You may have read through all of the questions and still ended up continuing with your repayment plans. In that case, great, but at least you know it IS the best course of action. For those who stand to benefit from using other ways – more savvy ways to make your money work harder for you, we hope that it has been of some use to you.

With so many variables at work in the property market and the fact that they all fluctuate independently of each other, re-evaluating what’s best for your financial health is a really good practice every now and again. What’s right for you now, might not necessarily be so in 7 or 8 years time. Life has a habit of throwing up things we weren’t expecting.

Thank you for reading. Come back soon for more advice, news and guidance from the team at Yes Mortgage Services.

 

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At Yes Mortgage Services, we offer a comprehensive range of products from across the market.

Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.

Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.

We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.

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Our friendly mortgage advisors are here to help. We have access to a comprehensive panel of lenders to ensure we research the most suitable mortgage solution for your needs. And the best bit? We don`t charge a broker fee!⁣

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Buying your first home can feel a little daunting and maybe even a bit scary at times. ⁣

But we`re here to guide you every step of the way so you can feel comfortable and confident throughout the entire process 🙌⁣

Our free expert advice covers everything from saving for your deposit, getting your credit score healthy and your finances ready, right through to choosing the right building surveys and solicitors.⁣

We`ll cut through the jargon, talk through all of your questions (there`s no such thing as a silly question in our minds), and guide you through finding the most suitable mortgage for your circumstances 🏡⁣

The best bit is we don`t charge a broker fee! - send us a message or give us a call on 0800 612 5596.⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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Our amazing team of experts are always on hand to find the right mortgage solution for you and to answer any questions you might have. Send us a message, or call us on 0800 612 5596.⁣
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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
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Our amazing team of experts are always on hand to find the right mortgage solution for you and to answer any questions you might have. Send us a message, or call us on 0800 612 5596.⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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More and more investors are buying properties within a Limited Company to keep things tax efficient. ⁣

But when it comes to refinancing or purchasing your new investment property, the process of getting a mortgage can feel challenging.⁣

Not anymore!⁣

Our Specialist Mortgage Advisors know which Mortgage Lenders are used to working with Limited Company Buy to Let portfolios. They`ll find you the most suitable deal and save you time and money by managing your mortgage application from start to finish. ⁣

Visit our website to learn more (🔗 in bio)⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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We believe in providing quality financial advice to everyone, regardless of their financial status. ⁣

That`s why we don`t charge a broker fee 🤩⁣

We`ll look after you for the lifetime of your mortgage/home ownership, ensuring you never pay more than you should on your loan. Whether you`re remortgaging, moving home, or making any subsequent property purchase, we`ve got you covered.⁣

Visit our website (🔗 in bio) to learn more.⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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#mortgagetips #mortgageexpert #devonproperty #bournemouthbusiness #southcoastuk #mortgagebroker #mortgageuk #ringwood #hampshireuk #mortgageadviser
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Being self-employed has its perks, but when it comes to getting a mortgage, things can get a little tricky. But you don't have to navigate this process alone.⁣
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If you'd like to chat with one of our advisors about self-employed mortgages give us a call on 0800 612 5596 or send us a DM⁣
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Being self-employed has its perks, but when it comes to getting a mortgage, things can get a little tricky. But you don`t have to navigate this process alone.⁣

We have access to a wide range of lenders and a deep understanding of what each one looks for when it comes to self-employed mortgages. Meaning we can find the most appropriate lender for your circumstances and needs!⁣

And the best bit? We don`t charge a broker fee 🤩⁣

If you`d like to chat with one of our advisors about self-employed mortgages give us a call on 0800 612 5596 or send us a DM⁣
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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
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#firsttimebuyeruk #firstimehomebuyers #propertyladder #firsttimehomeowners #firsttimebuyertips #JSPBmortgage

A JSPB mortgage enables you to accept the financial support of your family while retaining a sense of independence through sole ownership of your property.⁣

If you`d like to chat with one of our advisors about Joint Borrower Sole Proprietor Mortgages or buying your first home, give us a call on 0800 612 5596 or send us a DM⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#firsttimebuyeruk #firstimehomebuyers #propertyladder #firsttimehomeowners #firsttimebuyertips #JSPBmortgage
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Life throws curveballs, don't let a leaky roof be one! Building insurance provides peace of mind knowing your home's structure is covered. Talk to Kelly, our insurance advisor, to find the right coverage for your mortgage.⁣
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Life throws curveballs, don`t let a leaky roof be one! Building insurance provides peace of mind knowing your home`s structure is covered. Talk to Kelly, our insurance advisor, to find the right coverage for your mortgage.⁣

Get in touch on 0800 612 5596 or tap the link in our bio.⁣

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Connor joined our team back in July 2017!  He's lived all around the Southwest, from Cornwall to Bristol, and now he's found his sweet spot in Wellington, Somerset—right between the two!⁣
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When he's not crunching numbers, you'll find him whipping up some delicious dishes, hosting get-togethers with friends and family or enjoying the delights at his local cider farm🍺🌿⁣
⁣
All of our mortgage advisors (Connor included) are ready to help you whether you're looking to remortgage, buy your first home, or upgrade to a new one. The best bit is we don't charge a broker fee! Get in touch on 0800 612 5596 or send us a DM⁣
⁣
⁣
...⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#ukmortgage #mortgagesuk #wellingtonsomerset  #mortgageexperts #westcountry

Connor joined our team back in July 2017! He`s lived all around the Southwest, from Cornwall to Bristol, and now he`s found his sweet spot in Wellington, Somerset—right between the two!⁣

When he`s not crunching numbers, you`ll find him whipping up some delicious dishes, hosting get-togethers with friends and family or enjoying the delights at his local cider farm🍺🌿⁣

All of our mortgage advisors (Connor included) are ready to help you whether you`re looking to remortgage, buy your first home, or upgrade to a new one. The best bit is we don`t charge a broker fee! Get in touch on 0800 612 5596 or send us a DM⁣


...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#ukmortgage #mortgagesuk #wellingtonsomerset #mortgageexperts #westcountry
...

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We're flying the flag for Somerset! ⁣
⁣
With a team spread across the Southwest, we're proudly celebrating #SomersetDay and sending a special shoutout to our amazing mortgage advisor, Connor, who's lucky enough to live there.⁣
⁣
Let's have a bit of fun - how many of these places can you name? Share your score in the comments 👇⁣
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⁣
...⁣
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#somersetlife #loveforsomerset #visitsomerset #somerset #somersetday

We`re flying the flag for Somerset! ⁣

With a team spread across the Southwest, we`re proudly celebrating #SomersetDay and sending a special shoutout to our amazing mortgage advisor, Connor, who`s lucky enough to live there.⁣

Let`s have a bit of fun - how many of these places can you name? Share your score in the comments 👇⁣


...⁣

#somersetlife #loveforsomerset #visitsomerset #somerset #somersetday
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4 0